President Donald Trump announced a sudden pause on higher targeted tariffs for 90 days for most countries, a surprising move that reversed his stance on the trade war and alleviated market and economic turmoil that had ensued.
The big picture: The decision to pause the tariffs for 90 days was made as a result of more than 75 trading partners not retaliating and reaching out to the U.S. to discuss some of the concerns raised by Trump, leading to a temporary suspension of increased tariffs for most countries.
- Despite the pause, higher tariffs up to 125% were immediately imposed on China, citing a lack of respect shown by China to the world markets and asserting that a sustainable trade relationship is necessary.
- Not all countries were covered by the pause, and a 10% across-the-board duty remained in place, indicating that the trade war is ongoing, with the pause not reverting the world to pre-tariff imposition conditions.
Go deeper: The U.S., Canada, and Mexico trade agreement continued to exempt certain goods from tariffs, although products not covered under the agreement faced a 25% tariff, with Canadian energy and fertilizer products subject to a 10% tariff.
- Conversations surrounding the pause revealed some uncertainty, with the exact countries covered by the pause remaining unclear as the White House did not provide specific information on which countries were included in the temporary tariff suspension.
- Separate tariffs on imported autos, steel, and aluminum were also maintained, and planned tariffs on items like lumber and pharmaceuticals still stood, according to Treasury Secretary Scott Bessent.
- The unexpected pause led to a surge in markets, with major indexes including the S&P 500 and the Nasdaq experiencing significant gains, although they were still down compared to previous levels.
